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Issue 329
January 1 - January 7, 2007
Volume 7
page 1
 

This Issue

Gaming News

Casino City's January Sweepstakes

Harrah's next move is up to the pros

Man hits $1 million slot jackpot

Atlantic City voting on casino smoking ban

Macau's casino revenues over U.S. $6.5 billion in 2006

Show Time Stephen Lynch at The Borgota

Column Jest for fun by Larry Mak

Check out our entertainment highlights & upcoming tournaments

See the lucky winners

 

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Bill Frist named Casino City "Person of the Year"
by Casino City Editorial Staff


No, "You" are not the Casino City Person of the Year. We don't sell out like that; we actually make decisions. And yes, we're even ballsy enough to make decisions that won't be very popular.

Which is why Bill Frist is the 2006 Casino City Person of the Year.

Bill Frist - Former Senate Majority Leader
No one had a bigger impact on Internet gambling than Bill Frist in 2006. As the Senate Majority Leader, Frist attached the Unlawful Internet Gambling Enforcement Act to a must-pass Safe Ports Bill. The bill, which forces U.S. banks and financial institutions to block electronic transactions to Internet gambling businesses, passed both houses of Congress easily at the end of the last session before the mid-term election recess. President Bush signed it just a few weeks later.

After the law became official, PartyGaming, 888.com and other publicly held companies stopped accepting U.S. players.

Several reports indicate Frist was using the legislation to get in the good graces of Rep. Jim Leach (R-Iowa), who had been pursuing an Internet gambling ban for years. Leach could have been a powerful ally in a presidential bid in the early Iowa caucuses. But Frist, who did not run for reelection, decided not to pursue the presidency after heavy Republican losses in the mid-term elections.

While most legal experts believe the legislation itself doesn't do much to change the legality of online gambling, there's no doubt that the law has changed the landscape of the industry. And without Bill Frist, the UIGEA never would have made it through the 109th Congress.

The rest of the top-10
Frist wasn't the only person to have an impact on the gambling world in 2006. Here are the rest of Casino City's Top-10 People of the Year.

2. David Carruthers - Former CEO of BetOnSports.com
Carruthers' arrest in the Dallas-Fort Worth International airport signaled the end of safe passage for Internet gambling executives through the United States. Carruthers, who was relieved of his duties at BetOnSports soon after his arrest, is still awaiting trial on charges of racketeering, conspiracy and fraud. An outspoken critic of U.S. attempts to prohibit Internet gambling, Carruthers debated Leach in The Wall Street Journal prior to his arrest.

3. Jeffrey Pollack - World Series of Poker Commissioner
The World Series of Poker took a big step forward when it decided to hire its first commissioner. Pollack, who helped build NASCAR's brand, has done the same for the WSOP, creating corporate relationships and solidifying the tournament series' relationship with ESPN. The WSOP improved its format as well, adding a series of circuit events at Harrah's properties across the country and building interest with the $50,000 H.O.R.S.E. championship. Now if he can just make sure his tournament staff colors up chips correctly next year ...

4. Lou White - CEO of PokerTek
While you may not have heard of White, you've likely heard of his PokerPro tables. White invented the concept of the electronic poker table and built the first one in his basement. PokerTek tables have started creeping onto casino floors, and you can even find them on Carnival Cruise ships. While others are starting to enter the market, PokerTek is staying ahead by adding Omaha to the mix and even building a Heads-Up Table. The question for White in the coming years is whether PokerTek can compete with established industry veterans like Shuffle Master.

5. Mitch Garber - CEO of PartyGaming
While Bill Frist clearly had the biggest impact on Internet gambling in 2006, PartyGaming's decision to abandon the U.S. market may have had the second-largest impact on the industry. As the market leader, PartyGaming's decision likely influenced the decisions made by both publicly traded and privately held Internet gambling firms that also opted to block U.S. players.

6. Steve Wynn - Owner, Wynn Las Vegas, Wynn Macau
Our top-10 is admittedly very Internet and poker heavy, but Wynn's impact on the gaming world is undeniable. Wynn's entry into Macau signaled a new major market for gaming, and the decision to pool dealer tips with management in his Las Vegas casino is still generating headlines.

7. Daniel Negreanu - Professional Poker Player
While Negreanu had an impressive year, pulling in nearly $2 million in tournament winnings, he makes Casino City's list for his influence over the poker world. Negreanu was one of the few playing professionals to publicly criticize the UIGEA. And he championed Full Contact Poker's decision to switch software providers in the wake of the UIGEA so it could still accept U.S. players. He also believes in promoting innovations within the game, advocating the addition of the $50,000 H.O.R.S.E. tournament at the WSOP and captaining a team in the new Professional Poker League.

8. Jim Leach - Former Congressman, R-Iowa
The author of the UIGEA, Leach had been trying to push an Internet gambling prohibition through Congress for years. While he was finally successful late in the 109th Congress, the session also turned out to be his last. The 15-term Congressman was one of several Republicans to lose re-election bids this November. And while the lagging popularity of President Bush and the ongoing war in Iraq were cited as the major reasons the Republicans lost control of Congress, a Poker Players Alliance study concluded that Leach's involvement with the UIGEA led to his downfall.

9. Crispin Leyser - Suing Jamie Gold for $6 million
Even Jamie Gold admits that he couldn't have won the WSOP without Crispin Leyser. Bodog entered Gold into the event in exchange for procuring celebrities to wear Bodog clothing in the tournament. Gold's lawyers have conceded that Leyser helped procure those celebrities. They have even admitted that Gold agreed to split half of any winnings from the WSOP seat he obtained from Bodog with Leyser, though they argue that amounted to a gift and not a contract. If Gold had offered up the $6 million freely, he would be on our list as an honorable man. But instead, it's Leyser who makes the list for trying to keep poker honest.

10. Pamela Anderson - Endorsed PamelaPoker.com
The blond bombshell endorsed the short-lived PamelaPoker.com, which debuted just months before the UIGEA passed. Anderson pulled her endorsement soon after the law passed and the site now automatically redirects to Doyle's Room. Okay, there were plenty of people who deserved to be in our top-10 list ahead of Anderson this year, but how could you have a top-10 WITHOUT Pam Anderson. Plus it aids in our search engine optimization: Internet no limit Texas Hold'em poker players play no limit Texas Hold'em tournaments online for real money. Poker.


Harrah's next move is up to the pros
by Liz Benston, Our Partnets at the Las Vegas Sun

LAS VEGAS, Nev. -- There's more than one way to skin a casino.

If you're a multibillion-dollar private equity fund such as Texas Pacific Group or Apollo Management, you could buy up an entire company or just most of it, becoming a controlling shareholder and electing handpicked members to a company's board of directors.

You could buy a floundering business as Texas Pacific Group, a buyout and turnaround specialist, did with Continental Airlines, which avoided yet another bankruptcy under private ownership, and Burger King, which was improved and taken public by Texas Pacific and other partners this year.

Along the way, you could boost results by shaking up management and selling off underperforming assets, as Texas Pacific and Apollo have done.

You could also expand or take a company in a new direction, as Apollo did when it controlled Vail Resorts, a Colorado-based resort hotel company.

Under Apollo's majority ownership, Vail Resorts bought up resort hotels and other real estate and has been expanding its vacation empire ever since. Apollo took Vail public in 1997 and sold most of its stake in the company in 2004.

What direction the funds will take with Harrah's Entertainment isn't clear, although it's important to note that there's more to leveraged buyouts than a slash-and-burn approach to management.

For now, it's unclear how aggressively Harrah's will pursue dozens of potential growth opportunities in Las Vegas and beyond.

In an interview last week, Harrah's Chief Financial Officer Jonathan Halkyard said the company still plans to redevelop its Las Vegas casinos, work that has consumed the better part of nine months in brainstorming.

"This is an R&D exercise more than a construction drawing exercise at this point," Halkyard said, adding that the company has accumulated many conceptual drawings. Plans will be announced in phases over the course of 2007 and 2008 and will be built in stages, he said.

The first of those may take shape at the company's Caesars Palace flagship, which is further along than other properties in the planning process, Halkyard said.

The company wants to add a hotel tower behind Caesars' new Augustus Tower and replace its Strip-facing Roman Plaza with a building containing casino space, retail, restaurants and bars. The plans are expected to reach the Clark County Commission for a vote in January after being held over from a Dec . 20 meeting, although further delays are possible.

Top executives say private ownership won't alter the company's growth strategy, but they have acknowledged in employee meetings that paying down debt - estimated to nearly double after the deal consummates - will become their top priority.

In an attempt to allay concerns, the company is making presentations and distributing information to employees about Apollo and Texas Pacific, which are unknown entities in Nevada in spite of their recent rise to Wall Street fame as some of the largest buyout firms to take American companies private in recent years.

For instance, from one presentation: "Both firms have proven track records and strong reputations for partnering with companies to nurture and grow some of America's most recognized brands, including Continental Airlines, Neiman Marcus, Vail Resorts, Linens 'n Things, J. Crew, GNC Corp. and Bally Shoe. Of particular importance are their long-term perspective and willingness to help us in any way they can to deliver on our growth strategy and achieve our full potential."

Analysts are divided on whether Harrah's will choose to grow or scale back on spending, with some experts saying the company may choose a middle ground. Harrah's hasn't yet revealed many details of its plans in Las Vegas and abroad and therefore can reduce those plans somewhat without disappointing the public, they say.

News of the Harrah's buyout comes as many of the largest private equity firms, including Apollo, have formed their first-ever trade association to help legislators and regulators understand how buyout companies work.

The association would also help put a positive face on a business that has historically been associated, sometimes unfairly, with mass layoffs and asset sales to drive profits.

As the seventh-largest leveraged buyout in U.S. history and the largest in the gaming industry, the Harrah's deal is uncharted territory for all involved.

For now, Harrah's executives are bullish on growth.

The company is continuing its expansion of Harrah's Atlantic City, expected to be complete in 2008, and is acquiring London Clubs International, a British casino chain that also owns casinos in Egypt and South Africa, and is pursuing plans to build at least five casinos across the United Kingdom.

"Internationally we don't expect (the purchase) to influence any plans," Halkyard said of the company's stated goal of building Caesars casinos in the Bahamas, Spain and Slovenia.

Asia remains a key part of the company's growth plan, he added.

"At some point we want to have a Caesars in Macau," he said.

 

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